2. The Awl Bidness
Larry W. Lake Petroleum and Geosystems Engineering The University of Texas

3. The Oil Business Exploration Production Upstream Refining
Larry W. Lake Petroleum and Geosystems Engineering The University of Texas
Exploration
Production
Refining
Transportation
Marketing
Upstream
Downstream

4. A Brief Quiz… 1. What is the usual unit for a quantity of crude oil?
2. What is the usual unit for a quantity of natural gas?
3. How much crude oil goes into making gasoline?
4. How much of your gasoline bill pays for the crude oil?

5. A Brief Quiz (cont.)…
5. When was oil first discovered in commercial quantities?
6. Name a transportation fuel that is not hydrocarbon based.
7. What is the largest reservoir in the U.S.? In the world?
8. When will we run out of oil?

6. Exploration… Gas cap Seal or trap Oil column Water column or aquifer
Source rock

8. Seismic

9. Onshore Seismic…

10. Offshore Seismic…

11. Offshore Receiver Spreads…

12. [ ] ( ) Production… qo = 4pkhkro 4A gCArw2 ln + 2s mo (P – Pwf)
Driving Force
Productivity Index, PI

13. [ ] ( ) Production… qo = 4pkhkro 4A gCArw2 ln + 2s mo (P – Pwf)
Oil Rate - make as large as possible
Goal of everything we do

14. Constants - Live with them
Production…
qo =
4pkhkro 4A
gCArw2 ( ) ln
+ 2s [ ] mo
(P – Pwf)
Constants - Live with them

15. [ ] ( ) Production… qo = 4pkhkro 4A gCArw2 ln + 2s mo (P – Pwf)
Natural logarithm - makes a large number small
For example, ln(1000) = 6.9
Natural logarithm

16. [ ] ( ) Production… qo = 4pkhkro 4A gCArw2 ln + 2s mo (P – Pwf)
Permeability - basic property of rocks
Make large
God provides or doesn't
Fracturing

17. [ ] ( ) Production… qo = 4pkhkro 4A gCArw2 ln + 2s mo (P – Pwf)
Well pressure
Make small
Lift with gas
Pump (reduce fluid level)

18. [ ] ( ) Production… qo = 4pkhkro 4A gCArw2 ln + 2s mo (P – Pwf)
Average reservoir pressure
Make large
Reinject produced gas
Inject water (waterflood)

19. [ ] ( ) Production… qo = 4pkhkro 4A gCArw2 ln + 2s mo (P – Pwf)
Penetrated thickness
Make large
God provides, etc.
Reperforating
Horizontal wells

20. Horizontal Wells….

21. Aggie Drilling Engineer
From A.D. Hill

22. [ ] ( ) Production… qo = 4pkhkro 4A gCArw2 ln + 2s mo (P – Pwf)
Oil relative permeability
Make large
Large oil content
Inject chemicals, CO2

23. Schematic of solvent flood
Fig. 7-1
Drawing by Joe Lindley, U.S. Department of Energy, Bartlesville, OK

24. Typical Micellar-Polymer Flood...
Low salinity
Low calcium
Usually 0.5 PV
Surfactant
Co-surfactant
Co-solvent
Polymer
Oil (sometimes)
Usually 0.1 PV
Additives
Gradual change to water
Fig. 9-1

25. [ ] ( ) Production… qo = 4pkhkro 4A gCArw2 ln + 2s mo (P – Pwf)
Oil viscosity
Make small
Inject heat (steam)
Burn a little oil

26. Driving the Oil... Steam Drive
Process variations…
Cold Oil
Steam
Inject
(2-30 days)
Cold oil
Hot Water
Soak
(5-30 days)
Shut in
Produce
(1-6 months)
Oil + Water
Steam soak
Driving the Oil... Steam Drive
Steam
Oil + Water
Water
Cold Oil

27. More variations...
Using horizontal wells (SAGD)
Burning the Oil

28. In-Situ Conversion Process (ICP)
What is it?
Enhancement of natural maturation
of kerogen by slow heating
Results in:
thermal cracking
in-situ hydrogenation
high sweep vapor phase production
high API oil
N,S,O content vary with resource
Average temperature limited to boiling
point of diesel, i.e. essentially no bottoms
How is it done?
Electric resistance or, potentially, gas heaters
Underground conductive heat transport
Current target resources:
Oil Shale
Heavy Oil / Tar Sands
Coal
Naphtha
Jet
Diesel
Nat. Gas
Hydrogen
Chem. Feed
Heat
High Value Products
Light Processing
Perspective View
Producer
Heater
High Temperature Causes Long, Horizontal Fractures
Overburden

30. Next Research Phase 2 Step Process (at least) to Commercial
Freezewall Test
Football field sized test on 10 acres near existing research
Test robustness of freezewall barrier
Active construction/production from late ’05 – early ’07
Reclamation 2010

31. Ice Wall on Surface

32. [ ] ( ) Production… qo = 4pkhkro 4A gCArw2 ln + 2s mo (P – Pwf)
Well damage (skin factor)
Make small
Fracture well
Inject acid

33. Results of Quiz…
1. What is the usual unit for a quantity of crude oil?
1 barrel = 1 bbl = 42 U.S. gallons
1+6 zeros = 1 MMbbl
1+9 zeros = 1 Bbbl
1 metric ton = 7.5 barrels
Giant field: 100 MMbbl = 0.1 Bbbl

34. Results of Quiz…
2. What is the usual unit for a quantity of natural gas?
1000 standard cubic feet = 1 MCF
1 MCF+6 zeros = 1 BCF
1 MCF+9 zeros = 1 TCF
Roughly: 6 MCF gas = 1 Bbl crude

35. Cost of gas= $/Ccf

36. Results of Quiz… 3. How much crude oil goes into making gasoline? 39 %
Transportation
Residential/
Commercial
Industrial
Electricity
Generation &
Transmission
Non-Fuel
Waste = 25 %
Waste = 20 %
Waste = 83 %
Waste = 68 %
Work Achieved
23 %
15 %
39 %
Coal
Natural
Gas
Nuclear
Petroleum
Hydro
Other
Crude oil = transportation
Source: LLNL/DOE

37. Results of the Quiz…
How much of your gasoline bill pays for the crude oil?
(American Petroleum Institute, Sept. 2008)

38. Results of Quiz…
5. When was oil first discovered in commercial quantities?
Drake’s Folly … 1859
Corsicana … 1894
Spindletop … 1901
Big Lake (Permian) … 1923
East Texas … 1928
Texas

39. Results of Quiz…
6. Name a transportation fuel that is not hydrocarbon based.
Wind
Solar
Hydrogen (fuel cells)
Coal
Muscles

40. Results of Quiz… 7. What is the largest reservoir in the U.S.?
Prudhoe Bay, Alaska – 20+ Bbbls in place
In the world?
Ghawar, Saudi Arabia – 300+ Bbbls

41. Results of Quiz… 8. When will we run out of oil? 2005 2047 2% Growth
USGS Est. of Ultimate Rec
UR B-Bbls
Probability
Low (95%)
Mean (Expected Value)
High (5%)
2,248
3,003
3,896
2026
2037
2047
2% Growth
Decline
R/P = 10
History
Mean 70 60 50 40 30 20 10
Billion Barrels per Year
1900
1925
1950
1975
2000
2025
2050
2075
2100
2125
Campbell-Laherrere World Oil Production Estimates,
2005
EIA- DOE Estimates,

42. When will we run out of oil?
U.S. Production, Hubbert vs. Actual
Undulating Plateau vs. Peak Oil
From Jackson (JPT, 2007)

43. Major Points… Hydrocarbons found in porous rocks
Crude oil = transportation
Crude oil is about 70% of gasoline price
Hydrocarbons essential to current way of life
World has a 30+ year supply; delivery rate a question

44. Hydrocarbons and Prosperity…

45. For More Information… U.S. Energy Information Administration
American Petroleum Institute
International Energy Agency
California Division of Oil and Gas
Early Texas Oil (Rundell)

46. Chemical EOR Processes...
Process Typical Typical Agent Recovery (%) Utilization
Polymer 5 1/3-1/2 lb polymer/ bbl oil produced
Micellar/ lb surfactant polymer bbl oil produced
Alkaline/ lb chemical polymer bbl oil produced

47. US CO2 Emissions by Sector and Fuels 2000
Millions of metric tons per year carbon equivalent
100
200
300
400
500
600
700
Residential
Commercial
Industrial
Transportation
Electric
Generation
Natural Gas
Petroleum
Coal
Source: U.S. EPA Inventory of Greenhouse Gas Emissions, April 2002

48. Solvent EOR Processes... Process Ult. Recovery % OOIP Utilization
Miscible
10-15
10 MCF/bbl
Immiscible
5-10

49. Results of Quiz…
Expense
¢ per gallon
Production
15-60
Producer profit
53-58
Refining 13
Marketing 5
Transportation 15
Retailer 6
Refining etc. profit 10
US taxes 19
Ave. state taxes 23
Total
159
4. How much of your gasoline bill pays for the crude oil?
1$ change in crude price causes
2.5¢ change in gasoline price

50. Thermal Recovery Processes...
Ult. Recovery
% OOIP
Utilization
Steam (drive
and soak)
50-65
0.5 bbl /bbl equivalent
Combustion
10-15
10 MCF air/bbl
SAGD ??
Various EM
Like steam

51. Undulating Plateau vs. Peak Oil
From Jackson (JPT, 2007)